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Wednesday, 5 March 2014

THE POVERTY OF ECONOMIC DEVELOPMENT MODELS

PART I: The question of "Development Models"

What are plausible models of modern economic development and to what degree
do they improve people's lives"? In a globally integrated economy, is it
possible for a country to pursue development that does not conform to the
neoliberal policies that the IMF, World Bank, large banks and corporations, and
the most advanced countries are peddling to ensure even greater global
integration? Do economic growth and development alone account for human
happiness with the broader meaning of the term, or is the Western materialist
bourgeois society defining a value system for the entire world?

Because in the post-Communist era there is the current model of neoliberal
policies under globalization that has resulted in a few hundred billionaires
and multi-millionaires owning more wealth than half the world's population, the
legitimate question to pose is whether a variety of economic development models
even makes sense. We are now at the point that socioeconomic inequality
compares with pre-revolutionary France across Europe. Another question arising
from the existing egregious inequality on a world scale is whether civilization
can possibly survive by pursuing the existing neoliberal model that promises
prosperity, but delivers downward socioeconomic mobility, higher chronic
unemployment and underemployment, famine, disease, and conflicts arising from
mass demonstrations and rebellions in reaction to absence of social justice?

The mode of production, which determines the social order under capitalism,
has evolved from the Commercial Revolution in the 16th century to globalization
in the late 20th-early 21st century. Five hundred years after nascent
capitalism's nascent stage in northwest Europe, the manner by which the system
creates poverty as it simultaneously concentrates wealth and creates social
inequality, unequal exchange, and uneven world development have remained the
most compelling political issues of our time. At the dawn of the 21st century,
the international political economic structure remains unaltered in its goals
of capital concentration socially and geographically, promising greater growth
and development for all who take part in it. While global economic integration
under neoliberalism emphasizes the benefits of increased trade and the futility
of autarky in the age of globalization, critics question whether national
sovereignty is sacrificed in the process along with social justice, creating a
larger greater gap between the very few rich and the multitudes of workers.

Under the world-system of capitalism, there have been different models of
development in the history of capitalism, determined to a large degree by the
shifts from the primary sector of production (agriculture, forestry, mining and
fisheries) to the secondary sector (manufacturing) and to the tertiary
(service) and high tech/biotechnology sector. Before analyzing some models of
economic development, it is instructive to consider the following questions
about development economics.

a) What development model best serves the needs of the people, presumably
all people and not just a small percentage representing financial, political,
military, and bureaucratic elites? Is the existing model of neoliberal
capitalism the best and only option, or has it resulted in the downsizing of
the middle class? Because people have differing views on what best serves
society, that is, best serves every person equally in every respect in
institutional terms, most economic models are necessarily based on what best
serves interest groups within society. There are of course economic development
models that claim to best serve everyone, including Socialist and Communist
models, but in practice some sectors and some individuals are better served
even by those models, as history has clearly demonstrated in the 20th century,
than other groups in society.

b) Is it possible to separate politics from economics and speak in terms of
pure economics instead of a system of political economy and social structure?
If economics comes down to political decisions that result in some benefiting
and others hurting in society, should politicians be hiding behind economists
and organizations dealing with economic issues? Presumably, the political
economy of capitalism is predicated on an expanding middle class, or at least
on a steady upward socioeconomic mobility. However, does this system continue
to deliver on that promise in the Western World, or has it become an
impediment to its own stated goals and only Asia will experience such growth in
the next few decades?

According to the OECD,"In 2009 the middle class included 1.8 billion people, with
Europe (664 million), Asia (525 million) North America (338 million) accounting
for the highest number of people belonging to this group. ... The size of
the “global middle class” will increase from 1.8 billion in 2009 to 3.2 billion
by 2020 and 4.9 billion by 2030. The bulk of this growth will come from Asia:
by 2030 Asia will represent 66% of the global middle-class population and 59%
of middle-class consumption, compared to 28% and 23%, respectively in
2009..."

c) Is there such a thing as "the perfect" or 'ideal' development
model that can be applied perfectly in practice as it may appear in theory,
whether such a system is market-based, statist, or some model based on a
mixture? If economic dogmatism, especially on the part of the IMF, the World
Bank, and OECD, to mention just a few of the major influential organizations
dogmatically advocating neoliberalism, has not worked as it claims to make more
people and more countries more prosperous, then why is the mass media, many
academics, think tanks, as well as governments lining up behind such dogmatism
to mold public opinion?

d) Is it possible that one development model is ideal for all
countries regardless of when it is applied? Different countries
would require to adopt variations of different models depending on their
natural resources, labor force, level of current development and future
potential and aspirations. Can the same development model in the early 21st
century work to bring about greater development and upward socioeconomic
mobility for people in the US in the same manner as that model would work in
Kenya or Portugal?

e) Can development models be divorced from the realities of the present with
an eye on the future of a specific country? If Ukraine is currently in dire
need of massive injections of liquidity to prevent an inevitable bankruptcy,
would the combination of austerity, neoliberalism and external dependence that
the IMF is recommending result in prosperity or deeper socioeconomic crisis as
has been the case with countries of southern and Eastern Europe that adopted
such policies? Divorcing development models from the realities of the "real economy" also means that one does not take into account the subterranean economy, which includes everything from "shadow banking" to narcotics trade and other illegal activities not accounted as part of the legitimate economy.

f) Because the decision on what policies to pursue are always taken by
those who command economic and political power, can economic models in force be
anything other than true representations of society's elites that enjoy access
to power denied to the ordinary citizen? While it is true that citizens vote,
it is not true that their vote translates into policy influence. While a very
rich individual will invariably have direct or indirect contact and influence
in his/her government, it is simply impossible for an ordinary worker or middle
class professional to enjoy the same privilege. Therefore, the worker could
propose the best possible economic development model for society, but in the
end the government will adopt policies to serve the privileged
individuals.

g) Should GDP growth be the sole criteria for human happiness?In world public opinion polls the top
"happiest countries" are the economically most developed with
diversified institutional structures and a division of labor reflecting upward
socioeconomic mobility. This is a reflection of the value system rooted in the
18th century mindset that associates societal harmony and happiness with the
Industrial Revolution that in turn carries with a revolution in science and
technology and presumably solves human problems. However, three centuries have
passed since the Industrial Revolution began in England, we have had far
reaching scientific and technological advances, but a large percentage of the
world's population still lives in chronic poverty.

While human happiness is predicated on material fulfillment in Western
societies that have indeed spread their value system globally, spiritual
fulfillment remains a goal for many non-Western societies at the cultural
level. While a government pursues economic growth and development, culturally
society or at least a segment of it can reject material accumulation as the
sole criterion for progress and happiness. Even psychological well being of
course in a material society is itself a commodity to be purchased in the form
of medication and physician care for psychological problems, among other
things.

Of course, this does not mean that spiritual fulfillment by itself is a
substitute for material needs, but it does suggest the bottomless pit of
materialism is a value system that is itself rooted in a mind that can never be
fulfilled and will remain in disharmony. Finally, I offer a caveat regarding
the issue of value spiritual vs. materialistic value systems. It is true that
throughout history in all civilizations the elites that are invariably
materialistic have used the spiritual issue to amass wealth and to indoctrinate
the masses that all they need to live on is spiritual fulfillment. In short,
religion has been used by the materialistic elites as a distraction for the
masses and a substitute for material needs, ranging from basic food and decent affordable housing, to medical care and education for all and not just those who can afford it.

"A
gripping, passion-filled, and suspenseful tale of love, betrayal,
political and religious intrigue, this novel entices the reader’s
senses and intellect beyond conventions. Slaves to Gods and Demons
takes the reader through a roller coaster enthralling journey of
personal trials and triumphs of a family emerging vanquished and
destitute after World War II.

Narrated by a young boy, Morfeos, modeled after the Greco-Roman pagan
deity of sleep and dreams, the book reveals the soul of a people trying
to ascertain and assert their identity while rebuilding their lives and
recapturing the glory of a lost civilization.

Seeking liberation from restraints of time, social conventions, and
binding traditions, the deity of dreams provides the conformist and the
free-spirited characters in the novel with venues for redemption that
are mere paths toward illusions. Exploring the complexities of human
relationships shaped by priest and politician alike, the novel rests on
the central theme that life is invariably a series of illusions, some
of which are euphoric, most horrifying, all an integral part of daily
existence.

Striving for purpose amid life’s absurdities after the destruction of
western civilization in two global wars, the characters in Slaves to
Gods and Demons struggle between holding on to the glory and grandeur of
a pagan legacy and the Christian present shaped by contemporary
secular events in Western Civilization."